| 2.7 At last year’s Budget, I
had deferred the decision to reduce the personal income
tax rate further, because of the uncertain economic
outlook and our tight fiscal position. I am happy to
announce that we are now ready to go ahead.
2.8 I will lower the top personal income tax rate to
20% in two steps: first from 22% to 21% in Year of Assessment
(YA) 2006, and then to 20% in YA2007. The marginal tax
rates for all the other income brackets will also be
reduced, so that all taxpayers will benefit. The new
schedule of personal income tax rates for YA2006 and
YA2007 is at Annex A. With
this change, Singapore will have one of the most competitive
personal income tax regimes in the world.
2.9 I have decided to lower the tax rates in two steps
for reasons of fiscal prudence. It will also give us
a little more revenue over the next two years to implement
schemes to help Singaporeans cope with economic restructuring
during this crucial period of transition, when the economy
is growing but workers are still concerned about their
jobs.
2.10 These reductions will save taxpayers more than
$150 million in YA2006, $310 million in YA2007, and
about $3.3 billion over ten years. They will benefit
all tax-paying Singaporeans and make us more attractive
to internationally mobile talent.
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